PERSONAL INVESTING OPTIONS

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PERSONAL INVESTING OPTIONS

• Team Members
• Mauricio Coto - Organizer
• Michael Thompson - Summarizer
• Saurabh Desai - Techie
• Farouq Mahadin - Techie

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PERSONAL INVESTING OPTIONS

• ROTH IRA
• ANNUITIES
• 401K

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ROTH IRA

• Individual Retirement Account
• Uses after-tax contributions
• Grows tax free
• 3,000 limit in 2003

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Annuities

• Insurance agrees to make periodic payments after
  the person retires
• Uses after-tax contributions
• Tax deferred until withdrawal
• Taxes paid on benefits only
• Unlimited Contributions

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401K

• Retirement savings plan funded by employee
  contributions
• Often employee matched
• Tax deductible
• Tax deferred until withdrawal
• 13,000 limit in 2003

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CHOICES
Roth IRA Annuities 401K
Tax Deductible ? ? ?
Tax Deferred ? ? ?
Taxed at Withdrawal ? ? ?
What is Taxed 0 Profit only Whole sum
Contribution Limits 3000 Unlimited 13,000
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GOAL

• What is the Best Choice?
• Taxes NOW or taxes LATER?

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Study Case

• 25 yr. Old single male
• 35 years till retirement (retire at 60)
• 54K beginning salary 2 per year
• Marries at 30
• ROR decreases closer to retirement
• 3 Inflation

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TAXES NOW OR TAXES LATER
VS.
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CALCULATION END RESULTS
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INVESTMENT TAXATION
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SENSITIVITY ANALYSIS
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INCREMENTAL INVESTMENT
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CONSTANT INVESTMENTS
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NUMBER OF YEARS INVESTING (1)
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NUMBER OF YEARS INVESTING (2)
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VARYING AGI
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CONSTANT ROR
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OVERALL TAXES PAID
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VARIABLE ROR
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OVERALL TAXES PAID (VARIABLE ROR)
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WHERE TO INVEST???
ANNUITIES
ROTH IRA
401K
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QUESTIONS

• ???